Importance Of Indian Financial System

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Indian Financial Systems The financial system in any country is the basic foundation for its economic growth and development by mobilising the excess funds and by using it for constructive purposes. The different financial institutions, instruments, services and markets that result in the capital formation are defined as the financial system of a country. Financial system is characterised as the means to satisfy the long term and short term financial requirements of both corporate and households. Financial systems serve as a connecting link between savers and investors who seek capital. It helps in mobilizing funds from scattered savers into more efficient and effective investments. The financial systems also help in the decision making…show more content…
The banks in India also perform agency functions like dealing in foreign exchange and securities, purchase and sale of securities, trustee, executor and attorney etc. They also provide general utility services like safety locker facilities, insurance, money transfer, issue of letters of credit and provide trade information etc. The banking institutions of India are classified as non - scheduled and scheduled banks as per the second schedule of RBI Act, 1934. The scheduled banks are later classified as Public and private sector banks depending on the stake holders in the bank. India has 27 public sector banks of which 8 belong to the State Bank Group, the oldest and the largest banking institution in the country. The nationalisation of banks in India in 1969 and the liberalisation in 1990s serve as landmarks for the banking industry in India. The latest classification of banking sector in India depending upon the nature of operations or ownership include • State Bank of India and its associates…show more content…
They deploy their assets largely in marketable securities. The popular investment financial institutions in India are Life Insurance Corporation of India, United Trust of India, and General Insurance Company of India. The Life Insurance Corporation of India, the most popular investment institution in India had a monopolistic grip over insurance sector in India till the advent of private players in the sector. It also assists development of infrastructure facilities, extends resource support to other financial institutions by subscribing their stocks and bonds etc. The United Trust of India, UTI was set up to encourage small scale savings and investments. It mobilizes the small scale savings through sale units and channelizes them into corporate investments mainly by the way of secondary market operations The General Insurance Company was created for the purpose of promoting non life insurance sector in

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